Russia will begin trials for using digital assets, including cryptocurrencies, to facilitate cross-border transactions starting September 1. This move is aimed at mitigating the effects of Western sanctions.
Leveraging the National Payment Card System
The National Payment Card System (NPCS), established in 2014, will be involved in these trials due to its robust infrastructure and regulatory framework. NPCS already handles domestic interbank payments and operates the Mir payment cards. The central bank, overseeing NPCS, fully regulates the experiment to ensure compliance with national financial policies. Russia hopes that integrating cryptocurrencies into NPCS will ease payment difficulties faced by its exporters due to international sanctions.
The Legislative Framework
This development follows a series of legislative changes in Russia aimed at integrating cryptocurrencies into the national economy. In July 2024, the Russian parliament passed two key bills that legalize the use of cryptocurrencies for international trading and authorize specific institutions to mine crypto. These laws were signed by President Vladimir Putin on August 8, providing a legal basis for the upcoming trials and use of cryptocurrencies in international trade.
Next Steps
If the trials prove successful, crypto trading platforms may be established by the Moscow Exchange and the St. Petersburg Currency Exchange as early as next year, offering a regulated environment for these transactions. However, the path to full integration presents challenges, especially with traditional cryptocurrency exchanges that operate outside government control. Finance Minister Anton Siluanov noted that while Russia is open to exploring digital assets, it remains cautious of unregulated platforms.
These trials could be a significant step for Russia in circumventing international sanctions and easing export operations using digital currencies. Nonetheless, questions of regulation and integration with traditional crypto exchanges remain.
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